London/New Delhi: India wants $300 billion in investments over the next 10 years to satisfy accelerating demand in the world’s fastest-growing oil market.

The South Asian nation needs investments to boost the production of natural gas and crude oil, and to refine, transport and distribute the fuel to households, oil minister Dharmendra Pradhan said in an interview in Istanbul. He is confident both overseas companies and those at home will put in the required money as the government frames policies to encourage spending, he said on 11 July.

“India is the place where there is incremental demand,” Pradhan said. “Our per capita energy consumption is one-fourth of the world. In India, there is an emerging middle class and they are aspirational. Per capita energy consumption is going to increase. So, we need energy. There is no shortcut around that.”

The oil industry is pinning its hopes on India and China, together home to four of every 10 people in the world, as demand elsewhere remains weak while production stays high, keeping prices low. India’s prime minister, Narendra Modi, wants the country to cut its import dependence. Pradhan and officials of India’s state-run companies are scouring the world for access to reserves and technology, and bring them home to help boost production from both new and old assets.

Tighter budgets

BP Plc announced a $6 billion investment last month to boost natural gas production in a field off India’s east coast in partnership with Reliance Industries Ltd. The companies are resuscitating a partnership born in 2011, encouraged by several government reforms, including the freedom to price and market natural gas.

BP is one of the few global majors that have invested in India’s oil exploration. Some of the world’s biggest including Exxon Mobil Corp. have shown interest in exploring for oil in the country in the past, but not proceeded further. Oil’s collapse in the last three years has also forced companies to tighten their budgets.

State-run ONGC plans to invest $10 billion to expand output, Pradhan said, without giving a time frame. There are also investments planned in other parts of the oil business, he said.

“We are building a mega refinery in the west coast, we are building a refinery in Rajasthan,” Pradhan said. “So, in exploration and production, in refineries, in pipelines, in terminals, in petrochemicals and in the downstream networks, these are the areas we want more investments in.”

Saudi Aramco has shown interest in partnering with Indian state-run refiners to build a 60-million-tonne-a-year refinery project on the country’s west coast.

Diversifying supplies

The country is also planning to finalize a new policy that will encourage producers to increase oil and gas output from existing fields. The government is in discussion with companies and will come out with a policy “very soon,” he said.

“India’s oil and gas recovery is very modest in existing fields,” Pradhan said. “We are below the world average. We have to infuse technology. It must be tailor-made, it must be field specific. If we incentivize producers, only then they will invest.”

Pradhan’s spending plan compares with the $300 billion Saudi Aramco’s chief executive officer Amin Nasser announced at the World Petroleum Congress in Istanbul earlier this week. The outlook for oil supplies is “increasingly worrying,” and he wants the Saudi behemoth to be ready when demand surpasses production in the next few years.

Meanwhile, India is diversifying its sources of supply as prices remain low and oil producers want to secure buyers. Indian Oil Corp., the nation’s biggest refiner, bought its first US crude cargo and other state refiners such as Bharat Petroleum Corp., Mangalore Refinery & Petrochemicals Ltd and Hindustan Petroleum Corp. are likely to follow, Pradhan said.

The country is looking for oil that will give it the best price margins, he said. “We are open to sourcing crude oil from everywhere.” Bloomberg